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New Jersey Bill to Close SREC Program, Increase Solar RPS

New Jersey Governor Phil Murphy recently signed clean energy legislation that closes the door to new SREC applicants no later than June 1, 2021.

The bill, passed by the State Senate in April and signed on May 23, 2018, directs the New Jersey Board of Public Utilities (BPU) to adopt regulations closing the program to new applicants within 180 days of its effective date. It also calls for immediate program closure when each of the state’s energy providers reaches a 5.1 percent benchmark for sold kilowatt hours (KWh) sourced from solar electric power generators before the 2021 deadline.

For new applicants, the bill also reduces the standard SREC eligibility term from 15 to 10 years, though grid-connected solar facilities are still eligible to earn Renewable Energy Certificates (RECs) beyond the 10-year SREC limitation.

While Bill A-3723 will effectively end New Jersey’s current SREC program, it also requires that the BPU conduct a study to determine ways to modify or replace the SREC program to “encourage the continued efficient and orderly development of solar renewable generating sources.”

The study’s goals include identifying ways to:

  • Develop a program to reduce the cost of achieving solar energy goals
  • Provide a smooth transition from the current SREC program to a new one
  • Develop targets for grid-connected and distribution systems
  • Determine market-based incentive caps
  • Facilitate market-based cost recovery through long-term contracts

Increased Renewable Energy Portfolio Standards

In addition to the SREC program changes, the bill calls for an aggressive increase in RPS and solar carve-out, emphasizing New Jersey’s ambitious approach to clean and renewable energy sources. RPS describes the percentage of total energy production that a provider must produce through Class I renewable energy sources like:

  • Geothermal electric
  • Solar thermal electric
  • Solar photovoltaics
  • Wind
  • Biomass
  • Hydroelectric
  • Municipal Solid Waste

Legislative Bill A-3723 raises the existing RPS goal from 24.4 percent in 2028 to 50 percent in 2030, with milestones of 21 percent in 2021 and 35 percent in 2025. The targets for solar carve-out, the amount of total energy production gained through solar facilities, were also raised to 5.1 percent by 2021. The prior objective was 4.1 percent by 2028.

The increase in RPS, and the recent $300 million subsidy deal with the state’s nuclear energy provider, are in-line with Governor Murphy’s pledge to provide the state with 100 percent emission-free energy by 2050. State agencies will present an updated energy master plan mapping a path to this goal by June of 2019.  

“One of my goals as governor is to make New Jersey a leader, not just nationally, but globally, in the generation of clean and renewable energy,” Governor Murphy told reporters before signing the bill. “As a state already seeing the warning signs of climate change this is a matter of vital importance to our future.”

Increased Renewable Energy Storage

The bill requires the BPU to complete an energy storage analysis within one year of enactment before establishing a process to reach a goal of 600 MW of energy storage by 2021 and 2,000 MW by 2030.

BPU’s energy storage analysis must:

  • Consider how renewable electric energy storage systems benefit ratepayers
  • Consider whether storage systems could impact the use of electric vehicles
  • Examine current energy storage technologies in the state
  • Consider the benefits and costs associated with adding additional storage technologies
  • Establish the ideal energy storage capacity needed over the next five years
  • Identify favorable entry points into the electric distribution system for distributed energy resources
  • Calculate the ratepayer cost for adding the determined energy storage capacity

“New Jersey is way behind the 8-ball on energy storage,” Governor Murphy remarked. “This is important because of our efforts for clean energy production. With these technologies in place, we can continue to draw clean energy even when there is no sun to shine or when the winds slow. In this [renewable energy storage], New Jersey will be the undisputed leader.”

Lowered Solar Alternative Compliance Payments (SACP)

Energy providers purchase SRECs for RPS compliance. If a provider does not accumulate enough SRECs, it pays a predetermined SACP amount per SREC shortage. The new legislation gradually reduces the SACP schedule yearly from $293 per missing SREC to $239 in 2028.

The shrinking SACP and pending closure to new applicants is part of the state’s plan to move away from the current SREC program structure.

Increased Energy Efficiency

The bill calls for BPU to create an energy efficiency program for all public gas and electric utility companies to reduce natural gas and electricity usage.

The program will require each utility to introduce efficiency and peak demand reduction measures in its service area that reduces natural gas and electricity usage by two percent as compared to the average of the prior three years. Providers must reach this goal within five years of program implementation.

“We can’t just focus on energy production,” says Governor Murphy, “we also need to look for the energy we don’t need to produce.”

Perhaps prompted by the new efficiency measures and approved nuclear subsidies, the Macquarie Infrastructure Company (MIC) has decided to sell its 644-MW Bayonne Energy Center, a gas-fired power plant in New Jersey.

Tax Credit for Wind Energy Projects

The bill includes provisions to reinstate an expired tax credit for qualified wind energy projects in eligible zones and establishes job training programs in manufacturing and servicing of offshore wind energy equipment.

The Governor’s plan aims to attain a capacity of 3,500 MW through offshore wind energy by 2030.

Community Solar Energy Pilot Program

In establishing a community solar energy pilot program, the bill allows public utility customers to partake in energy projects with local solar Installation companies that are not located on their property but are within the utility company’s service area.

The program permits customers to receive credits on their utility bill equal to the amount of electricity generated through a solar facility with a capacity of 5 MW or less. BPU must establish regulations and parameters for the program and convert it from a pilot to a permanent program within three years.

“The BPU will work to implement a community solar energy pilot program so more residents can take advantage of the opportunities that solar energy provides, particularly those in underserved communities who have not had the ability to access solar energy,” the Governor said.